You are the Partner in Charge of a large metropolitan office of a regional public accounting firm. Two members of your professional staff have come to you to discuss problems that may affect the firms independence. Neither of these situations has been specifically answered by the AICPA Processional Ethics Division. Therefore, you must reach our own conclusions as to what to advise your staff members, and what actions, if any, are to be taken by the firm.

CASE 1: Don Moore, a partner in the firm, as recently moved into a condominium which he shares with his girlfriend, Joan Scott. Moore owns the condominium and pays all the expenses relating to its maintenance. Otherwise, the two are self-supporting. Scott is a stockbroker, and recently she has started acquiring shares in one of the audit clients of tis office of the public accounting firm. The shares are held in Scots name. At present, the shares are not material in relation to her net worth.

CASE 2: Mary Reed, a new staff auditor with the firm, has recently separated from her husband. Mary has filed for divorce, but the divorce cannot become final for at least five mots. The property settlement is being bitterly contested. Marys husband has always resented her professional career and has just used community property to acquire one share of common stock in each of the publicly owned companies audited by the office in Mary works.

For one case, you are to (Students with last names beginning A-L CASE 1, M-Z CASE 2, your reply should be on the opposing case):

1. Set forth arguments indicating that the firms independence has NOT been impaired.
2. Set forth arguments indicating that the firms independence HAS been impaired.
3. Express your personal opinion. Identify those arguments from pat (a) and (b) that you found most persuasive. If you believe that the firms independence has been impaired, make suggestion about how the problem might be resolved.